Churchill attributes first-quarter profit to diversification

Diversification into casinos and advance-deposit wagering helped Churchill Downs Inc. turn a profit in the first quarter, traditionally a lackluster time of year for the Louisville racetrack-based business.

According to quarterly results released late Monday, Churchill Downs had record first-quarter revenue of $138.2 million, up 5 percent from the same quarter in 2011.

Churchill reported net earnings of $1.4 million, or 8 cents a share, for the 2012 quarter compared to a loss of $3.2 million, or 19 cents a share, for the first quarter in 2011.

The company attributed the gains to 20 percent revenue growth of the online account wagering operation. TwinSpires handle increased 15.2 percent over the same period in 2011, primarily driven by new customers, including many registered during Derby Week.

That far outstripped growth of betting on horse-racing as a whole. Equibase reported that total wagering was up 5.4 percent.

Churchill CEO Robert L. Evans said all three segments showed improved performance, although racing revenue was down 5 percent from the same quarter the previous year and Churchill's casino business was essentially flat.

"Historically, the seasonal nature of our racing operations resulted in losses for the quarter, but the diversification of our business model into our gaming and online businesses more than offset first-quarter losses from racing," Evans said in a news release.

The first-quarter results don't include the Kentucky Derby and Oaks week, which set records for attendance and handle, Evans said.

"Oaks Day attendance of 112,552 was the second-highest ever. Total all-sources handle on the Oaks Day card totaled a record $39.9 million, up 7 percent over 2011's $37.5 million, the previous record," Evans said. "And then there was the Kentucky Derby; pick a record, and we probably set it this year. Attendance was a record 165,307, up from the previous record of 164,858 set last year. All-sources handle for the 13 Derby Day races totaled a record $187 million, up 13 percent from last year's $165.2 million, and 7 percent above the previous record of $175.1 million set in 2006."

Handle on the Derby alone was up 19 percent from last year, to $133.1 million, and 12 percent higher than the 2006 record, he said.

Evans predicted that Oaks and Derby Week gross earnings would be a new record and could hit $5.5 million.

In a conference call Tuesday morning with Wall Street analysts, Evans called the quarter "very solid."

While the opening night and Oaks were affected by bad weather, the weekend's other events made up for it, Evans said.

Evans said TV ratings didn't set a record, but with 14.8 million TV viewers, up from 14.5 million last year, the Kentucky Derby was the third most-watched Derby in 23 years, since Sunday Silence won in 1989, Evans said.

"We beat the final round of this year's broadcast of the Masters, the Daytona 500 and the Louisville-Kentucky Final Four game," Evans said.